Some of you may have noticed that last week we missed our ‘Question of the Week’, so this week we give you not one but two to make up for it.
Let’s start today with a recent question received on pension growth
I’ve read that deferred pensions are uplifted by Consumer Price Index (CPI ) but in service accruals increase by Average Weekly Earnings (AWE), so wouldn’t many serving personnel see better pension growth by leaving rather than continuing to serve, given the current high inflation and low earnings growth context?
Answer:
Sometimes CPI changes will be more favourable than AWE. Over the long term however it is thought that AWE changes exceed inflation as they did for this year’s increases (CPI 3.1%; AWE 4.1%). Agree not looking good for next year, but of course the amount of pension accrual will always be greater than the rate of inflation and pension only accrues whilst somebody continues to serve.
Check back tomorrow for another question in this series.
